MSPs accompany customers in the digital transformation

Service Provider Summit 2022
MSPs accompany customers in the digital transformation

Professional service providers understand the business model of their customers and know their processes. According to Tom Schröder, Head of DACH at CloudBlue, they are therefore in a position to support companies in digitization.

ITB: ‘Service Providing beyond Hyperscale’ is the motto of this year’s Service Provider Summit. How have the market conditions for regional and medium-sized service providers changed in recent years due to the rapid growth of hyperscalers?

Schröder: Hyperscaler and its comprehensive public cloud offerings can be a strong competitor for service providers, who usually only have a limited asset portfolio and can thus achieve fewer economies of scale. You have to ask yourself how you would like to react to this. With a value-add approach, hyperscalers have been offering dedicated accreditations for service providers as part of their partner programs for a long time. The cooperation with hyperscalers and the bundling of offers are the keys to success. Such cooperations offer managed service providers (MSPs) the opportunity to use synergies, learn more about new concepts, acquire knowledge and thus participate in the success of the major players.

ITB: The hyperscaler programs are not known for offering high margins to partners. How can the cooperation with you still pay off for an MSP?

Schröder: This concept can only develop profitably if customers also purchase the products through service providers and thus remain in their ecosystem in order to offer cross- and upsell opportunities. Since the margins of the large hyperscalers are manageable, service providers must therefore think about an integrated portfolio with hyperscaler components, which they distribute to their customer base with differentiated value propositions. Ordering, processing and billing should be just as easy as with the hyperscalers.

ITB: Will service providers therefore primarily pursue asset-light strategies in the future, i.e. offer their services via public cloud platforms, or will an asset-heavy approach with its own infrastructure still make sense?

Schröder: The digitization push of recent years has permanently changed the consumer behavior of B2B customers. Companies are increasingly relying on an asset-light approach via the cloud, as they often cannot offer the resources they use more cheaply and securely themselves, and service providers should do the same. On the one hand, in order to be technologically closer to the customer, on the other hand, because there are completely new and much more extensive business opportunities for you – especially in connection with technological business platforms for cloud ecosystems. If service providers can ensure a simple customer experience with platforms such as CloudBlue for the procurement of bundled offers, they increase their customer loyalty, remain competitive, act more flexibly and benefit from higher margins outside the provided compute resources.

ITB: Companies decide to work with an MSP to free themselves from infrastructure operations and concentrate on their core processes. Should providers primarily focus on their role as a technical service provider or should they also deal with their customers’ business models and processes in order to support them, for example, in digitization projects?

Schröder: Service providers should offer both aspects as part of their business model in order to differentiate themselves from the hyperscalers. After all, digital transformation requires many companies to make extensive modifications to their business models. As a rule, a professional service provider knows the demanding challenges of the associated processes of its customers. Hyperscalers do not have this granularity. Service providers are able to support companies more specifically during the transformation phase and thus ensure that performance resources are not left unused. In addition, you benefit from the scaling of precise and differentiated use cases. With shared services, service providers achieve the necessary economies of scale in central processes that provide the individual customer with a better offer. Here, too, there is a need to ensure an integrated and simple customer experience for the customer by being able to flexibly scale related services.

ITB: What follows from this for the competencies that service providers must have. What skills do you need beyond the purely technological skills?

Schröder: In fact, it has not been enough for some time to focus purely on the operation, maintenance and support of IT environments. With the growing number of solutions used by companies, the complexity of obtaining, providing and managing these solutions by an MSP is increasing. As more and more processes are outsourced, you can position yourself in both low- and high-volume business. In addition, the operation of digital business infrastructures will also be in demand in the future. This includes the maintenance of the infrastructure of digital business solutions as well as the engagement at the digital touchpoint. However, this requires that service providers are not only well versed in IT support, but also have an understanding of what their customers are doing with it. You also need to have the soft skills to deal with the companies correctly and to know what you need.

ITB: To what extent do service providers have to adapt their service portfolio to the changes outlined and the increasing complexity?

Schröder: The demand for managed services is evolving. This makes the portfolios more complex and differentiated. This means that for each individual service provider, the need to make their own offer flexible is increasing.

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